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How Vans Shoes Became A Quiet Fashion Juggernaut

This article is more than 8 years old.

This story appears in the December 13, 2015 issue of Forbes. Subscribe

Most shoes are instantly forgettable. There are exceptions--clean, pristine Stan Smiths, Bean's duck boots. Likewise, Vans' thick-soled skateboarding sneakers, which are, somewhat improbably, more relevant and prevalent now than at any other point in the company's almost half-century of existence. Such longevity wasn't always assured. "I like to joke that we've had a checkered past," says Vans President Kevin Bailey, a pair of the company's kicks in his hands: iconic black-and-white checkerboard ones, recently reengineered for greater comfort at roughly half the weight. On his feet, a similar pair in rainbow checks.

Vans is owned by the publicly traded clothing giant, VF Corp., which also has such brands as The North Face, Wrangler and Timberland. Back when VF bought Vans for $370 million in 2004, Vans was publicly traded, too. And fading fast. Between 1993 and 2003 it struggled to turn a profit, and by the end it was losing $30 million a year. Sales had stagnated at around $330 million. The company was a case study in brand extensions gone awry--dabbling in everything from documentary filmmaking to skateboarding parks--but none of it helped the Cypress, Calif.-based company sell any more shoes. Its former moments of glory, like when Spicoli slouched into a pair of checkerboards in Fast Times at Ridgemont High, seemed as distant a memory as high school history class.

At first VF triaged the situation, adding more retail presence and beefing up its executive ranks. Bailey, 54, who had previously run retail at Vans from 2002 to 2007, was rehired in 2009 after a short stint at Lucky Brand jeans. He was quick to spearhead a push into new markets (the East Coast, as well as Asia) and deepened the product line, redesigning some shoes to be lighter weight, others to be warm in cold, wet East Coast weather. Vans also extended its brand--smartly this time--into apparel, leveraging the strengths of its parent company.

VF expects 49-year-old Vans to do $2.3 billion in sales this year, up from around $2 billion last year, making it the fastest-growing part of VF. If you valued Vans like public peer Skechers , it'd be worth about $3 billion, seven and a half times what VF paid. All of it is a bit surprising to Mitch Kummetz, an analyst at B. Riley & Co., a Los Angeles-based investment bank, who has followed Vans since before VF bought it: "If someone had suggested to me back then that Vans could be a $2-billion-in-sales business, I would've said, 'No way.'"

Prior to the acquisition Vans was seriously distracted. In the late 1990s and early 2000s the company built a nationwide chain of 12 skateboarding parks. It paid $5.2 million for a 70% majority stake in the Warped Tour, a punk rock music fest, financed the skateboarding documentary Dogtown and Z-Boys and owned the Vans Triple Crown Series, a televised group of action-sports championships--skateboarding, surfing, snowboarding, wakeboarding, motocross and BMX. In 2003, just before its sale to VF, Vans wrote off roughly $20 million in one-time charges as it wound down the skate-park business. The Triple Crown Series has been slowly dismantled, reduced to just surfing today. Only the Warped Tour rocks on.

Instead of wasting time and money on marginal businesses, VF refocused on retail, increasing its store count by 24% to 200 stores by 2009. Then it made its core product--shoes, not spectacle--better. Over the last five years it has released a steady stream of new shoes with tweaked designs that still retained much of the company's classic appeal.

Those fresh lines included lighter-weight shoes with more cushioning than original Vans but retaining the signature thick-sole look. Another line: weatherized kicks with a layer of heat-retaining material that adds roughly 5 degrees of warmth. (It got the idea for the latter, the "space blanket," Bailey says, from NASA .) "Winter comes, and we're still just selling vulcanized canvas shoes--that's no good in Boston," Bailey says.

Why stop at shoes? Vans' SoCal vibe could appear on any number of apparel products--sweatshirts, sweatpants, backpacks, jeans, socks. This was doing brand extension the right way, leveraging the expertise and distribution of its parent company. To keep up with tastes, Vans cut its apparel production timetable by more than half, which had been following a traditional 18-month shoe-development cycle. Apparel is a $400-million-in-revenue part of Vans now, up from virtually nothing in 2003.

An expanded product lineup was exactly what Vans needed to push out of California and into the rest of America. After trying (and failing) to get a foothold on the East Coast through Florida, he tried again in chic New York City. If the brand could take off in fashion-conscious New York, he reasoned, maybe it could carry that success into other parts of the country. In 2011 Vans opened its first Manhattan store, then expanded to surrounding suburbs and neighboring states. It now has 359 U.S. retail stores--many redone with more display tables, fewer shoe racks on the wall and limited discounting.

Ahead, Bailey's focused on Asia. That area barely had a heartbeat in 2003 and now accounts for 10% of Vans' sales. China is a particularly big opportunity, and after establishing itself as fashion-forward and artsy there, Vans has earned itself a nickname: "Big Brother Vans." It sounds vaguely ominous to Western ears, but Bailey is quick to explain that this big brother is supposed to "help me identify what's cool," he says. "You're going to tell me what's cool."

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